Canara Bank Raises Floating Rate on Home Loans

June 12, 2007	(1 votes, average: 3 out of 5)  Loading ...
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Canara bank has increased its floating interest rates on home loans by 175-200 basis points as it struggles with shooting defaults. The banks will also charge second home buyers 25 basis points more, even if the borrower has not availed any loan for the first house.

The bank will charge 25 basis points higher interest on a home loan above Rs 20 lakh than the home loans up to Rs 20 lakh. The bank is charging 10.75-11.25 per cent rate of interest on home loans up to Rs 20 lakh. All the revised rates have already been made effective from June 1, 2007.

Since the Canara Bank had kept its interest rates on home loans unchanged till mid-2006, it has now come up with sharp hikes. Canara bank is believed to be charging the highest rate of interest among all the other public sectors banks.

Comparing the interest rates trends, the country’s largest bank State Bank of India (SBI) raised its home loan rates by 175 basis points whereas other public sector banks have increased their rates by 50-100 basis points since mid-2006.

Canara bank is no longer lending home loans at fixed rates. Loans sanctioned to borrowers availing for buying second home will carry a 25 basis points higher rate. The margin for purchase of a second home is also higher at 25 per cent.

The bank now has 5 per cent points higher margin requirement for loans to purchase an old home whereas it is 20 per cent and 25 per cent for loans up to Rs 20 lakh and above Rs 25 lakh respectively as compared with 15 per cent and 20 per cent for purchasing a new house or flat.

News Published Under:   Home Loans |

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